chapter 11

Question 1

a comprehensive system for collecting, anaylzying, and communicating financial information

Answer 1

accounting

Question 2

recording accounting transactions

Answer 2

bookkeeping

Question 3

organized procedure for identifying, measuring, recording, and retaining financial information

Answer 3

accounting information system

Question 4

keeps external parties informed about the firm’s financial condition

Answer 4

financial accounting

Question 5

directed at internal parties- provides information to facilitate planning, forecasting, and decision-making

Answer 5

managerial accounting

Question 6

examination of financial records to ensure fair representation

Answer 6

auditing

Question 7

tax return preparation and tax planning

Answer 7

tax services

Question 8

personal financial planning to business planning

Answer 8

management consulting services

Question 9

hired as salaried employees, duties cover day-to day accounting needs

Answer 9

private accountants

Question 10

anything of economic value owned by a firm or individual

Answer 10

asset

Question 11

any positive difference between a firm’s assets and liabilities

Answer 11

owners equity

Question 12

any debt owed by a firm or an individual to others

Answer 12

liability

Question 13

all transactions are entered in two ways showing how they impact assets and liabilities

Answer 13

double-entry bookkeeping system

Question 14

amounts owed to the firm by customers

Answer 14

account receiable

Question 15

cost of merchandise acquired for sale but not yet sold

Answer 15

inventory

Question 16

supplies on hand and rent paid for coming period

Answer 16

prepaid expenses

Question 17

have a long-term use or value

Answer 17

fixed assets

Question 18

non-physical assets with economic value (patents, trademarks, franchise fees)

Answer 18

intangible assets

Question 19

the amount paid for an existing business beyond the value of its other assetsq

Answer 19

goodwill

Question 20

debts owed by the firm that must be repaid within one year

Answer 20

current liabilities

Question 21

debts owed by the firm and due in more than one year

Answer 21

long-term liabilities

Question 22

owners holdings in the firm

Answer 22

owners equity

Question 23

the formal recording and reporting of revenues in financial statements once the earnings cycle is completed

Answer 23

revenue recognition

Question 24

expenses will be matched with revenues to show net income for an accounting period

Answer 24

matching

Question 25

a detailed financial plan of estimated receipes and expenditures for a future period

Answer 25

budget

Question 26

net income/ total owners equity

Answer 26

return on equity

Question 27

net income/ sales revenue

Answer 27

return on sales

Question 28

net income/ number of common shares outstanding

Answer 28

earnings per share

Question 29

cost of goods/ sold average invetory

Answer 29

inventory turnover ratio